Booming Housing Market a Sign of Fragile Economy

Fear -- and artificially low interest rates -- may be propping up the global economy.
July 7, 2005, 2pm PDT | Michael Dudley
Share Tweet LinkedIn Email Comments

"The role of phenomenally low long-term (inflation-adjusted) interest rates in covering up a multitude of weaknesses in the global economy is all too apparent. Soaring house prices worldwide are propping up consumer demand in many countries...America has been the single biggest beneficiary of this freakish low interest rate environment, with everyone seeming to borrow money like it is going out of style. Homeowners, backed by rising house prices, are piling up debt. The federal government has thrown fiscal prudence out the window. The country as a whole is absorbing an astounding three-quarters of global excess savings. But, as long as interest rates remain low and growth high, Americans can laugh at predictions that their excesses are laying the seeds of ruin."

Thanks to Michael Dudley

Full Story:
Published on Wednesday, July 6, 2005 in Tom Paine - Common Sense
Share Tweet LinkedIn Email